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Reading the tea leaves on one of the shortest and least revealing statements in many years, economists warn that the Reserve Bank has maintained a hawkish...
The information flow has been very light since the February Monetary Policy Statement - hence we don't think the RBNZ's monetary policy stance will have changed much since February. We expect no change in the OCR, with the decision to be accompanied by a relatively short statement that suggests little change in the OCR outlook from that communicated in the February Statement. We expect the RBNZ will:
For the RBA, today’s update provides further confirmation that the labour market is indeed easing. That said, in its February Statement on Monetary Policy, the RBA continued to assess the labour market as “tight relative to what is consistent with full employment”. More updates on the state of the labour market will be necessary before any material adjustment to that assessment occurs, especially given the seasonality associated with January’s figures.
Dollar declined broadly overnight, US Treasury's borrowing plan for Q1 that spurred rally in the stock market, propelling it to new record highs while simultaneously exerting downward pressure on yields. Despite this shift, the greenback remains largely within its recent trading range. Market participants seem to be holding the substantial bets for now, awaiting the outcome of FOMC rate decision scheduled for tomorrow. Furthermore, the upcoming non-farm payroll data on Friday is also expected to be a key determinant in shaping the next moves.
RBNZ Chief Economist Paul Conway struck a hawkish tone in a speech today, tempering market expectations for imminent policy easing. Conway acknowledged the effectiveness of current monetary policy in slowing the economy and reducing inflation. But he emphasized noted that the journey to achieving the target midpoint is far from over. His remarks also indicated that recent weaker GDP data would not automatically lead to a dovish shift in RBNZ's approach.